CRA Export Audit? Don't Let Misclassification Sink Your Profits
Facing a CRA reassessment on exports? Capital Tax Law clarifies & helps recover denied export zero-rating. Free consultation! (158 characters)
Being labeled a “builder” by the CRA for GST/HST purposes can be a frustrating surprise, especially if you’re not one! Whether you’re a contractor, renovator, or simply someone who sold a renovated property, Capital Tax Law can help.
Export Sales Deemed Domestic? Your Profits Could Be Drowning!
Canadian businesses thrive on international trade, but navigating export tax regulations can be tricky. One significant challenge is the Canada Revenue Agency (CRA) potentially reclassifying your exports as domestic sales. This misclassification can deny you the valuable zero-rating on GST/HST you deserve, leading to a hefty tax bill. If you’ve received a CRA reassessment questioning your export sales, don’t panic! Capital Tax Law can help you fight for a fair resolution.
What is meant by Domestic Sales and Exports for GST/HST purposes?
The Excise Tax Act (ETA) is the governing act for GST/HST related matters. However, the Canada Revenue Agency (CRA) uses the ETA along with specific criteria to define and distinguish them for GST/HST purposes:
Domestic Sales
When you sell goods or services to a customer within Canada, it's considered a domestic sale under the ETA. You're liable to collect and remit GST/HST on these sales at the standard rate.
Exports
When you sell goods and ship them permanently outside of Canada, it's considered an export under the general principles of the ETA. Exports are generally zero-rated for GST/HST purposes, meaning you don't collect or remit the tax. This provides an important tax advantage for Canadian businesses engaged in international trade.
The CRA's Scrutiny: Qualifying for Export Zero-Rating
The CRA uses strict criteria to ensure goods are truly exported and qualify for zero-rating. Here are some key factors they consider:
Proof of Export
Solid documentation demonstrating the goods have definitively left Canada is crucial. This can include bills of lading, commercial invoices, and export permits.
Destination of Goods
The goods must be physically exported and destined for a customer outside Canada.
Delivery Terms
Delivery terms like Incoterms (International Commercial Terms) can influence classification. Incoterms specify responsibilities for tasks like transportation and insurance during the export process.
The CRA Says My Exports Are Domestic Sales. What Now?
A CRA reassessment denying export zero-rating can have serious financial consequences:
Tax Reassessment
You may be liable for back taxes on the denied
export sales.
Penalties and Interest
Late payment penalties and interest charges can significantly increase your tax burden.
Fighting for Your Rightful Export Zero-Rating with Capital Tax Law
Our team at Capital Tax Law understands the complexities of export tax regulations. We can help you navigate the CRA’s reassessment and fight for a fair outcome:
Reviewing Your Documentation
We'll meticulously examine your export documentation to ensure it meets the CRA's requirements.
Building a Strong Case
We'll develop a compelling case demonstrating the legitimacy of your export transactions.
Negotiating with the CRA
We can negotiate with the CRA on your behalf to minimize penalties and interest charges.
Appealing the Reassessment
If necessary, we can guide you through the appeals process to challenge the CRA's decision.
Don't Let a CRA Misclassification Sink Your Profits! Contact Capital Tax Law Today!
Restore clarity and ensure you receive the rightful export zero-rating for your business. Contact Capital Tax Law today for a free consultation. Our tax experts will guide you through the process and help you recover denied export zero-rating, maximizing your profits and minimizing your tax burden.